5 of the Most Common Tracked Sales Metrics
Better data means more effective Sales Metrics
With the steady increase of business intelligence, small to medium businesses, managers and owners have been able to take advantage of better data. One business function that has really benefited from the increased business intelligence is sales. Since there are so many sales-related metrics to employ, it can be very difficult to choose the metrics that will be most effective for your business. To aid in your selection process, here are five of the most common and useful sales metrics used.
The sales pipeline
This metric is often employed by businesses to show current sales opportunities and estimate the number of sales and revenue the sales team will bring in over a set period of time, usually a couple of months. When employed correctly, team members are better able to track and remain in control of their sales. Managers can also be assured that targets are more accurately set and reached.
When companies set up their sales pipeline metrics they often set out to measure the following things:
- Average time deals remain in the pipeline.
- Average percentage of converted leads.
- Average worth of every deal.
- The number of potential deals in the pipeline.
Overall sales revenue
This metric is often seen to be the most vital sales-related metric to implement – largely because it provides managers and owners with a good overview of the health of their company as well as overall performance. In short, sales revenue allows you to accurately view an overview of the profitability of your business.
Beyond giving a useful whole-business overview, this metric can also uncover exactly how much each sale influences or contributes to the bottom line. This can be calculated by using the standard profit-ratio equation – net income over sales revenue.
Accuracy of forecasts
As many sales managers know – forecasts are just that… predictions. But, because so much of sales is based on informed speculation it is important to track the overall accuracy of any future forecasts. By doing so, you can uncover gaps in processes and reveal any forecasting tools that need to be improved.
From here, you can track improvements and tweak forecasts to ensure that they become as accurate as possible. Showing that you are meeting your goals can enable you to make more reliable decisions and be assured that your company is doing as well as it appears to be.
The win rate, also known as the closure rate, is the rate that shows how many opportunities are turning into closed sales. Because this rate looks at the number of sales, you want it to be as high as possible (especially when you look at the time your sales team puts into closing sales).
While a high rate is preferable, low win rates are also useful largely because they can highlight areas where improvement is needed. For example, if your team has constantly low win rates across the board, then it could signify that there is a need for more training on closing sales, or that sales staff may not be knowledgeable enough about the products or services being offered. A fluctuating rate could show increased industry competitiveness and highlight when a sales push could be beneficial.
The loss rate can be just as important as the win rate – largely because it focuses on how many potential customers did not purchase products and/or services from you. It can highlight problematic areas in the early stages of the sales process. For example, by tracking the loss rate you may be able to see that response time is low, which can cause potential customers to walk away.
Essentially, when measured correctly, you can use loss rate to improve the overall sales process and hopefully bump up your overall win rate. By comparing the two rates, you are able to see how big a gap there is. Your sales team can then work towards finding ways to reduce this gap.
How can we help
If you are looking for solutions that allow you to track and measure your sales and any other data you generate, contact us today to learn how we can help turn your data into valuable, viable business information to lead your company to better success. Dynamics 365 can improve your business processes as well as help shorten sales cycles. For over a decade, enCloud9 has helped SMBs increase efficiency and boost productivity through Microsoft’s powerful range of cloud-based software. Let us know how we can help.